DEFINITION of 'Peak-To-Valley Drawdown'

A fund or money manager's largest cumulative percentage decline in net asset value. It is defined as the percentage decline from the fund's highest net asset value (peak) to the lowest net asset value (trough) after the peak. Funds that have been in existence for long periods of time may have a number of peak-to-valley drawdowns over various time periods.

BREAKING DOWN 'Peak-To-Valley Drawdown'

While declines in a fund's net asset value are inevitable, investors monitor the length of time it takes for the fund to recoup those losses. The shorter the recovery period, the better the fund's performance. The caveat here, however, is that the recovery from the drawdown should not be achieved by the fund manager taking on a significantly greater degree of risk to get a boost in performance.

RELATED TERMS
  1. Drawdown

    The peak-to-trough decline during a specific record period of ...
  2. Maximum Drawdown (MDD)

    The maximum loss from a peak to a trough of a portfolio, before ...
  3. Drawdown Percentage

    The portion of a retirement account that a retiree withdraws ...
  4. NAV Return

    The change in the net asset value of an exchange-traded fund ...
  5. Return Over Maximum Drawdown (RoMaD)

    Return over Maximum Drawdown (RoMaD) is a risk-adjusted return ...
  6. Asset Size

    The total market value of the securities in a mutual fund's portfolio. ...
Related Articles
  1. Investing

    What's a Drawdown?

    A drawdown is usually expressed as a percentage change between the peak price and the low price (trough) of an investment.
  2. Investing

    The 4 Best American Funds for Growth Investors in 2016

    Discover four excellent growth funds from American Funds, one of the country's premier mutual fund families with a history of consistent returns.
  3. Investing

    3 Vanguard Mutual Funds with Long Track Records

    Read about a few Vanguard mutual funds with long track records. Learn about the Vanguard Wellington Fund which began trading in 1929.
  4. Investing

    Mutual Funds: Does Size Really Matter?

    The growth of mutual funds isn't always cause for celebration. Read on to find out why.
  5. Financial Advisor

    CWGIX: Overview of Capital World Growth & Income Fund

    Learn about the American Funds Capital World Growth and Income Fund, a world stock fund that seeks quality stocks on any of the world's largest exchanges.
  6. Investing

    Calculating Return on Net Assets

    Return on net assets measures a company’s financial performance.
  7. Financial Advisor

    Top 5 American Funds for Retirement Diversification in 2016

    Discover five mutual funds from industry leader American Funds with high yields that are perfect for retirement savings diversification.
  8. Financial Advisor

    CAIBX: Overview of American Funds Capital Income Builder

    Learn about the American Funds Capital Income Builder Fund, a world asset allocation fund from Capital Group that focuses on a high level of income.
  9. Investing

    How the "Buy the Dip" Mentality in the Stock Market May Fade

    Consider portfolio changes for a sustained stock market drawdown, with the S&P 500 near its record high, stock valuations stretched and economic growth slowing.
RELATED FAQS
  1. What is the difference between a drawdown magnitude and drawdown duration?

    Learn about the two different measures of drawdown, magnitude and duration, and why it's critical for traders to understand ... Read Answer >>
  2. How do drawdowns help assess investment risk?

    Learn how the concepts of drawdowns and maximum drawdowns are used in the analysis of risk, as well as in the building of ... Read Answer >>
  3. What is the difference between a drawdown in banking and a drawdown in trading?

    Understand the two completely different meanings of the term ''drawdown'' as it is applied within the contexts of trading ... Read Answer >>
  4. What is a drawdown arrangement?

    Find out what a drawdown arrangement is, how it differs from a normal annuity, and why they form an important part of retirement ... Read Answer >>
  5. What trading strategies help investors withstand a drawdown?

    Understand the concept of drawdown and the importance for traders of having a trading strategy that takes temporary drawdown ... Read Answer >>
  6. How does a pension income drawdown work?

    Understand what a pension income drawdown plan is, and learn the current rules governing pension income drawdown plans in ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center